Financial Management - Essay Example

The Sainsbury maintains 15 percent share in the company whom as of 2008 employs 150,000 employees. (wikipedia) Circumstances that led to downfall were due to management inefficiencies of strategies. For instance, management believed on the strength of their position in the market cannot be moved. Company made mistakes on decisions that have moved their loyal customers to competitors and erased brand loyalty to the company. These painful experiences which include wrong advertising campaign, brutal treatment of supplies, reluctance to move for quality or value and other indecisions brought down the profitability of the company for the first time.

Company is always one step behind competitors (Wikipedia). Using business ratio report, this part of the study will give us n insight on the financial performance of the company against the leading players in the industry sector. This will show the trend, size of the market, growth , competitor analysis with the process of simple benchmarking and will be presented through the League of Tables. 1. Trend. Percentage of sales of Sainsbury on 5 yr period of 0.87 is higher than the industry and sector Table 1.

S&P 500 has a higher benchmark but this could not be used as basis as companies in this group are not allied with supermarkets. This also shows the relative strength of Sainsbury in sales performance along with competitors. 2. Company performance. In terms of profitability (Table 7), net profit margin of Sainsbury is higher than the industry and sector both on a yearly and 5 yr average trend. These figures will lead analysts to believe that Sainsbury plc is recovering and performance is leading to growth.

This should cause an alarm for both the management and investors and target efforts should be directed for correction in this area. Investors are mostly apprehensive on earnings per share, and one of the reasons for decline or rising of market trading and prices. Table 8 and 9 shows a comparison of